|
 Offering a retirement plan can be one of the most challenging, yet rewarding, decisions an employer can make. The employees participating in the plan, their beneficiaries, and the employer benefit when a retirement plan is in place. Administering a plan and managing its assets, however, require certain actions and involve specific responsibilities.
Beginning with the Employee Retirement Income Security Act (ERISA) in 1974, a great deal of legislation has been drafted and enacted by Congress to protect these benefits to be sure they are available when employees retire. ERISA is enforced by the US Department of Labor (DOL). ERISA sets standards of conduct for those who manage an employee benefit plan and its assets (called fiduciaries).
Unfortunately, many plan sponsors believe that once they have selected a third party (outside) plan administrator and/or investment advisors, they no longer have any responsibility for the operation of their plan. While it is true many aspects of plan administration can be effectively delegated to third parties, it is also true that plan sponsors always have some responsibility to plan participants and beneficiaries for the proper operation of the plan.
The DOL's website, www.dol.gov/ebsa, is a great resource for plan sponsors. There are several publications available at this website that explains in simple terms the fiduciary duties that all plan sponsors have to plan participants. One such publication is "Meeting Your Fiduciary Responsibilities."
Understanding fiduciary responsibilities is important for the security of a retirement plan and compliance with the law. The following tips may be a helpful starting point:
1. Have you identified your plan fiduciaries, and are they clear about the extent of their fiduciary responsibilities?
2. If participants make their own investment decisions, have you provided sufficient information for them to exercise control in making those decisions?
3. Are you aware of the schedule to deposit participants' contributions in the plan, and have you made sure it complies with the law?
4. If you are hiring third-party service providers, have you looked at a number of providers, given each potential provider the same information, and considered whether the fees are reasonable for the services provided? Reasonable plan fees are an increasingly important issue at the DOL.
5. Have you documented the hiring process for outside plan service providers?
6. Are you prepared to monitor your plan's outside service providers?
7. Have you identified parties-in-interest to the plan and taken steps to monitor transactions with them?
8. Are you aware of the major exemptions under ERISA that permit transactions with parties-in-interest, especially those key for plan operations (such as hiring service providers and making plan loans to participants)?
9. Have you reviewed your plan document in light of current plan operations and made necessary updates? After amending the plan, have you provided participants with an updated SPD or SMM?
10. Do those individuals handling plan funds or other plan property have a fidelity bond?
If you would like a copy of the DOL publication, "Meeting Your Fiduciary Responsibilities," or are concerned about any aspect of your company's retirement plan, please contact your representative at Rea & Associates.
- by Paul McEwan, CPA, MT (New Philadelphia office)
|
Full Newsletter
